REAGAN PLAN STIRRING FEAR OF MASS TRANSIT CUTBACKS

REAGAN PLAN STIRRING FEAR OF MASS TRANSIT CUTBACKS; The Budget Targets Sixth in a series on key programs; that President Reagan wants to cut.

By ERNEST HOLSENDOLPH, Special to the New York Times

Published: April 9, 1981

WASHINGTON, April 8—
The Reagan Administration says it wants to see the people who use transportation services pay a greater share of the cost, reducing the demand for assistance from the Federal Government.

This approach has drawn much attention to programs assisting passenger and freight rail service, with Transportation Secretary Drew Lewis's plan to slash Amtrak and turn Conrail over to private hands again, but the greatest public impact may well be felt in mass transit.

Over all, the Reagan Administration seeks little change in the transportation budget in this fiscal year, which ends Oct. 1. But, in the next year, it proposes to lower the spending ceiling by $4.8 billion, down to $19.2 billion, from the proposed Carter Administration figure of $24 billion.

However, that would only be the beginning of the reduction. Mr. Lewis has said that he hopes to ''save'' as much as $31 billion between now and the fiscal year 1986 by trimming from various transportation programs, ranging from mass transit to subsidies to help states enforce the 55-mile-an-hour speed limit. His desire to phase out operating subsidies starting in the fiscal year 1983, possibly ending them in 1985 or 1986, may make this the most notable budget change for public service.

Public Transit Philosophy

Local public transit, Mr. Lewis believes, should end its relatively new, but fast-growing, dependence on Federal aid for day-to-day operations. He says that he continues to endorse Federal aid for the purchase of equipment and facilities, but that operations should be supported by the fare box and local subsidies.

The mass transit program dates from 1964 with the passage of the Mass Transit Act, initially to aid in planning programs for public transportation. At first, it provided only about $60 million nationwide.

Starting in 1970, after the Urban Mass Transit Administration was founded, funds were made available in sizable amounts for the first time, with Federal assistance grants going to localities that wanted to buy buses or build rail or other facilities.

In 1974 when the Arab oil embargo and other factors began to cause dramatic increases in the cost of operating transit systems, the Government, through the Urban Mass Transit Administration, began to make operations subsidies on the basis of a distribution formula, based mostly on population. This proved to be especially valuable to older cities like New York with large existing transit operations - and costs. Federal Assistance Grants

Equipment, such as transit vehicles, is bought jointly by the Federal Government and the localities, with the Urban Mass Transit Administration putting up 80 percent of the price.

Nearly $2.7 billion is expected to be available this year for such capital needs as buses, stations and rail construction as well as for the purchase of other equipment. Although no dramatic increases are foreseen over the next five years, the Administration expects existing regional transit systems in the older cities to get a greater share of Federal support because new rail projects in growing regions, such as the Sun Belt, will be slowed or temporarily halted.

Mr. Lewis said recently that he had no objection to Federal aid to communities for the purchase of buses and transit equipment and that he had no objection to a recommendation that the Federal Government buy equipment for the cities and then sell it to the cities for a percentage of the price.

On the operating side, proposed Federal outlays this year are expected to reach $750 million nationwide, and rise somewhat in next two years before winding down starting in 1983, according to the Reagan plan. Fears on Mass Transit

Local transit operators are worried about losing substantial parts of their budget. For instance, Federal operating assistance is nearly 8 percent of the $2.4 billion annual budget of New York's Metropolitan Transit Authority. The loss of that aid could add 15 cents to the price of each 60-cent ride, according to Arthur Perfall, an authority spokesman.

Municipal and county governments, which, along with the states, already provide substantial amounts of subsidies, also are lining up to oppose the proposed Administration policies toward mass transit.

On one score, at least, transit officials have found an ally in the Drew Lewis administration. The Secretary strongly believes that transit systems should formulate their own ways to provide transportation for handicapped citizens.

Specifically, legislation submitted to Congress by the Reagan Administration would allow the localities to provide specific service for handicapped persons as an alternative to making an entire transit system accessible to all handicapped persons - an alternative that could mean billions of dollars in savings to big cities like New York, according to the Transportation Department. Highway System Cutbacks

The proposed spending cutbacks extend to several other Federal programs. The Interstate Highway System, begun in 1956, would be quickly wound down by the Reagan Administration, which is determined to complete the system by 1990.